Trump has earlier repeatedly called India a “tariff king”, arguing that classic American exports like the Harley Davidson motorcycles were unable to compete in India owing to high market access barriers. Diplomatic source say further trade talks are planned during the visit itself with US Trade Representative Robert Lighthizer and US Commerce Secretary Wilbur Ross accompanying Trump.
Hope on agri pact
Officials say India is now hoping to sign a smaller pact, focusing on agriculture goods. "Talks on agri are still open and a limited trade cooperation pact arising out of these may be included in the joint statement announced by both leaders," a commerce department official said.
This may see India systematically rolling back duties on high-value farm imports such as almonds, walnut, apples, and wine, which were among 29 items on which the government had hiked duties by up to 50 per cent last year, he added. Trump's core constituency of American farmers has lost their prime foreign markets after nations retaliated to Trump's unilateral tariff hikes by making it equally expensive to buy American products.
But talks remain deadlocked over New Delhi’s decision to saddle medical device imports with an additional health cess announced in the last Budget. Despite remaining the largest source of shipments, US-made devices have continued to lose market share in India to cheaper alternatives from China and Germany. Though India has said it won’t roll back the tax, sources said the Centre was considering allowing a trade margin policy for certain high-value items such as coronary stents.
“Discussions on other issues — lower duties for US industrial components, engineering products, and information technology goods like smartwatches and iPhones — are lengthy and will need to be taken up only after Trump's visit," an official said.
GSP not yet
New Delhi's biggest demand — the reinstatement of trade benefits under the US' Generalized System of Preferences (GSP) scheme — has been rebuffed by US officials. "They made their position clear last week by classifying India as a developed economy, which we don't support," a senior trade department official said.
The GSP is America’s oldest preferential trade scheme, which offered Indian exporters tariff-free access to the US until June 2019, when all benefits were suspended. India was the largest beneficiary nation with tariff exemptions amounting to $260 million in 2018, which covered exports worth $6.35 billion, according to the data from the US Trade Representatives.
India’s merchandise exports to the US have risen in the past four years, reaching $52.4 billion in FY19, up from $47.8 billion in FY18. But in-bound shipments too have jumped to $35.5 billion last year from $26.6 billion in FY18, reducing India's trade surplus.